The days of “coming to China with a shotgun-full brands” and a marketing model based on “if you sell it they will come” are over, says Jonathan Turner, Greater China GM at Brandimage. “We need to see the opportunity in this, and there is opportunity to be had,” he says. “But we have to be smarter and more focused. There is an increasing sophistication of Chinese consumers that is very real.”
Brands need to build an emotional connection with consumers and stress the distinct functional benefits of the product. “Consumers now ask, ‘What is that brand going to do for me?’ or ‘How much does that brand care about me?’ There are many different ways brands can address that,” he says. “In the automotive industry, for example, marketing has become much more experiential, and consumers think about things like, ‘How much are they spending on food for me?’”
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Tate Wang, CEO of lifestyle ecommerce site YHouse, is even more gung-ho about the economic future, predicting “a new golden age” — but he doesn’t expect its arrival to be completely bloodless. “The new economy is going to be based on a completely different foundation, and traditional companies are not going to adapt quickly enough,” Wang says. “It will be survival of the fittest.”
Domestic consumption will be driven by the so-called ‘post-90s’ generation, Wang argues, and the way they think, act and interact with brands is totally different from other generations. “This group wants to use their money on life experiences. They don’t mind spending money, in fact, they enjoy it, but they are very demanding. You have to be active on WeChat and in constant direct contact. If they feel you aren’t responding quickly or in their own language they will move on to the next seller.”
“In China you don’t have time to think ... you have to just go for it. If you hesitate, someone else will do it before you.”
Wilson Yao, Allyes Group
Francis Liu, director of strategy and operations in Audi’s sales division, agrees, saying his team has had to rethink their entire approach. The old sales pitch of answering questions and offering a test-drive just doesn’t work anymore.
“These days, 90 per cent of our customers know all the performance details of the model before they arrive — they sometimes know as much as our sales staff — so they don’t want that from us,” Liu says. “They are looking for a much more personal experience, something that builds a connection between them and the brand.”
Sometimes innovation calls for just a relatively small change based on one of the most fundamental aspects of marketing: knowing your consumer.
Marketing for the marque’s popular A6 model, for example, had been based around the assumption that target buyers were predominantly men in their mid-to-late 40s who work in the government. As a result, the vehicle was produced virtually exclusively in one colour: black.
“When we looked at the data, we were surprised to find A6 drivers in China are much, much younger than we thought, particularly in the South,” Liu says. “They don’t want black cars — they prefer lighter colours such as metallic grey or silver. So we started making the car in a wider range of colours and sales went up immediately.”
Richard Summers, partner at Anomaly Shanghai, agrees that steepening competition across the retail sector strengthens the role of marketing and pushes brands to be more innovative.
“In the past, advertising and marketing weren’t the key drivers of sales in China, it was distribution,” he says. “There was a sense that you could just drop brands into China and they would sell so long as you could deliver the products. Marketing’s role was just putting pretty pictures on the wall.”
“It’s the pace of change that makes China unique. In the rest of the world it has taken a decade or more to happen. In China it has taken just two years.”
Richard Summers, Anomaly Shanghai
However, clients are steadily moving from vague branding campaigns that can’t be measured to insisting on greater amounts of tracking and measurement to evaluate the effectiveness. “This isn’t unique to China. Our company was founded in the US 10 years ago to meet the need from brands to do something new to connect with increasingly sophisticated consumers,” Summers says. “It’s the pace of change that makes China unique. In the rest of the world it has taken a decade or more to happen. In China it has taken just two years.”
Wilson Yao, CEO of Allyes Group, puts the market’s rapid evolution down to a Chinese tendency “to push things to the max right away, just to see how far they will go”. That creates a powerful drive to experiment that can be hard to resist. “We have to innovate. If we don’t innovate, we are finished. In China you don’t have time to think and plan your next move carefully, you have to just go for it. If you hesitate, someone else will do it before you.”
That tendency to push to extremes has led to another new source of tension: sweeping new ad legislation, which came into force in September.
“The ban on using superlative language — the best this, the number one that — has had a big impact and driven a certain type of inventiveness,” says Leesher Wei, director of major client affairs at Zhejiang TV’s internet arm, Wasu.cn. “Whenever they introduce a new regulation in China, people look for ways to get around it. I’ve seen quite a few adverts that describe their products as being ‘so good that the ad law won’t let us tell you how good’.”
However, others in the industry downplay the scope for circumventing the legislation and say the risks involved mean it is not worth the gamble.
“There is a bit of irony, perhaps some people poking fun at the government,” says Michael Tang, president of Hdtmedia. “No reputable brand is going to do that, though.
“The new law is actually a good thing because a lot of bad advertising is going to disappear, and it will help agencies to behave better. Much of the legislation isn’t in fact new, but the penalties involved are now very serious. Many fines used to be just a few thousand renminbi, so there was a constant temptation to bend the rules. Everyone is going to follow the law now.”